BWP Trust · ASX:BWP
BWP Trust — Investor Presentation (May 2009)
35 slides from BWP Trust's investor presentation, May 7, 2009
Slide 1: Capital Management Initiatives: $150 million entitlement offer
Capital Management Initiatives $150 million entitlement offer Not for release or distribution in the United States or to US persons or persons acting for the account or benefit of US persons 7 May 2009
Slide 2: Disclaimer
Disclaimer This information has been prepared by Bunnings Property Management Limited ABN 26 082 856 424 (“the RE”) in its capacity as responsible entity of Bunning Warehouse Property Trust ARSN 088 581 097 (“BWP”) in connection with a non-renounceable entitlement offer of new ordinary units in BWP
Slide 3: Presentation outline
Presentation outline 1. Executive Summary 2. Benefits of the Offer 3. Overview of BWP 4. Portfolio 5. Capital management 6. Details of the Offer 7. Key Investment Risks 8. Appendix a) Portfolio update b) Bunnings Group Limited trading update c) Foreign jurisdictions – selling restrictions and limita
Slide 4: Executive summary
Executive summary • Bunnings Warehouse Property Trust (BWP) is seeking to raise approximately $150 million of new equity (the Offer) to strengthen its balance sheet and enhance its defensive characteristics and financial flexibility • The Offer will be a non-renounceable 1 for 3.09 entitlement offer
Slide 5: Benefits of the Offer
Benefits of the Offer • The Offer will improve BWP’s ability to meet its objectives to provide unitholders with a secure, growing income stream and capital growth by: – Providing short term financial flexibility to manage debt funding; and – Better position BWP over the medium term to pursue its pru
Slide 6: Overview of BWP
Overview of BWP • BWP’s defensive characteristics are its underlying strength – Traditional property trust with a domestic asset base • Portfolio consists of 60 Australian predominantly bulky goods retail assets valued at $956 million as at 31 December 2008 • Geographically diverse across the countr
Slide 7: BWP has outperformed the market during the current financial crisis
BWP has outperformed the market during the current financial crisis • BWP’s defensive characteristics have enabled it • BWP has consistently delivered stable to outperform the market distributions to investors – Best performing A-REIT over the last 12 months¹ – BWP outperformed the S&P/ASX 200 A-REI
Slide 8: Portfolio – platform for sustainable growth
Portfolio – platform for sustainable growth • Existing leases enable BWP to continue to extract growth from its current portfolio • The majority of BWP’s rental income growth is generated from CPI linked rent reviews FY09 market rent reviews completed Rental income profile Determined/ Passing rent n
Slide 9: Portfolio – platform for sustainable growth (cont’d)
Portfolio – platform for sustainable growth (cont’d) • BWP has maintained a disciplined and prudent approach to acquisition and development opportunities • Mt Gravatt, QLD • Cannon Hill, QLD ($1.2m) • Hawthorn, Vic ($24.1m) ($11.2m acquisition – Amalgamation of BWH & DC – Site acquired for $19.4 mil
Slide 10: Portfolio – platform for sustainable growth (cont’d)
Portfolio – platform for sustainable growth (cont’d) • Bunnings Group Limited has requested additional options to extend its leases at 15 of the Trust’s Bunnings Warehouses. This proposal is currently being considered • Proposed upgrades of existing properties – Fyshwick: a proposal from Bunnings Gr
Slide 11: Capital management: gearing and debt covenants
Capital management Gearing and debt covenants • BWP is in full compliance with all debt covenants • Debt facilities are on an unsecured basis and include the following main covenants: – Covenant gearing ratio (total debt and non-current liabilities/total tangible assets) • Not to exceed 45% – Intere
Slide 12: Capital management (cont’d): funding profile
Capital management (cont’d) Funding profile BWP debt profile pre raising Limit ($m) Drawn ($m) as at 31 Dec 08 Expiry ANZ 100 98.2 31 July 2010 NAB 100 89.3 Evergreen2 CBA 100 100.0 14 January 20103 WBC 80 57.9 1 July 2010 380 345.41 1 Amount drawn includes accrued interest of $1.175 million as at 3
Slide 13: Capital management (cont’d): gearing
Capital management (cont’d) Gearing • BWP has maintained a conservative level of gearing over time – Management has operated within a target range of 20-40%, measured on a total debt/total asset basis 50% 40% Preferred range 35.5% 30% 20.9% 20% 10% 0% Jun 01 Dec 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06
Slide 14: Capital management (cont’d): pro-forma balance sheet
Capital management (cont’d) Pro-forma balance sheet Balance sheet ($'000) 31 December 2008 Actual Pro-forma $150m raising1 ASSETS Cash 9,253 9,253 Receivables 1,878 1,878 Investment property 956,311 956,311 Other 850 850 Total Assets 968,292 968,292 LIABILITIES Interest bearing debt 344,225 202,376
Slide 15: Capital management (cont’d): pro-forma earnings
Capital management (cont’d) Pro-forma earnings • Forecast second half FY09 distribution of 4.54 cpu (post the Offer) reflects: – Operating earnings above budget – Increased number of units on issue as a result of the Offer – Termination costs on excess interest rate derivatives – Represents a total
Slide 16: Capital management (cont’d): sensitivity analysis
Capital management (cont’d) Sensitivity analysis (for illustrative purposes only) • BWP’s debt facility covenants can withstand significant asset value deterioration Asset devaluation 0% (5%) (10%) (15%) (20%) Total asset value ($’000)1 968,292 919,877 871,463 823,048 774,634 Covenant gearing (%) –
Slide 17: Details of the entitlement offer
Details of the entitlement offer • Entitlement offer of approximately 100 million new BWP ordinary units at a fixed Offer price of $1.50 to raise $150 million – The Offer is fully underwritten by J.P. Morgan Australia Limited • A volume bookbuild will be conducted at the offer price for entitlements
Slide 18: Indicative timetable
Indicative timetable Timetable Date Institutional Entitlement Offer and Bookbuild (open) Thursday, 7 May 2009 Institutional Entitlement Offer and Bookbuild (close) Friday, 8 May 2009 Trading recommences (T) Monday, 11 May 2009 Record Date for Entitlement Offer 5:00pm (W AST), Tuesday, 12 May 2009 Re
Slide 19: Peer comparison
Peer comparison Forecast FY10 distribution yield comparison1 Trading price discount to NTA² 14.0% 0.0% -10.0% 12.0% -20.0% -30.0% 10.0% -40.0% 8.0% -50.0% -60.0% 6.0% -70.0% Bunnings CFS Retail Cw th Prop Dexus Mirvac REIT Abacus Bunnings CFS Retail Cw th Prop Dexus Mirvac Abacus (BWP) (CFX) (CPA) (
Slide 20: Conclusion
Conclusion • BWP’s fundamentals remain strong – Simple, transparent investment vehicle with a conservative gearing level – Geographically diversified portfolio of Australian bulky goods retail properties – Stable income underpinned by leases to Wesfarmers (BBB+ credit rating) subsidiary – Rental gro
Slide 21: Important holding information
Important holding information Ineligible unitholders • Some unitholders resident outside Australia and New Zealand are not eligible to participate in the non-renounceable entitlement offer due to securities law restrictions on the offer of BWP units in certain jurisdictions (Ineligible Unitholders)
Slide 22: Important holding information (cont’d)
Important holding information (cont’d) Stock lending and other transactions • Eligible Unitholders will be entitled to apply under the entitlement offer for a certain number of new units held as at 5:00pm (WAST) on 12 May 2009 (Record Date). Notwithstanding the Record Date for the entitlement offer,
Slide 23: Key investment risks
Key investment risks This section discusses some of the key risks associated with an investment in BWP. Additional risks that BWP is not aware of, or that it currently considers to be immaterial, could also have a potential negative impact on BWP in the future. If any of the risks or a combination o
Slide 24: Key investment risks (cont’d)
Key investment risks (cont’d) Customers – Insolvency or financial distress of BWP’s tenants may reduce the income received from its assets. Counterparty/credit risk – Third parties, such as tenants, developers and other counterparties to contracts may not be willing or able to perform their obligati
Slide 25: Key investment risks (cont’d)
Key investment risks (cont’d) Litigation and disputes – Legal and other disputes (including industrial disputes) may arise from time to time in the ordinary course of operations. Any such dispute may impact on earnings or affect the value of BWP’s assets. Competition – Competition may lead to an ove
Slide 26: Glossary
Glossary Term Meaning A-REIT sector Australian Real Estate Investment Trust sector ASX Australian Securities Exchange or ASX Limited or the financial market which it operates as the case requires Bunnings Group Limited Bunnings Group Limited and its subsidiaries BWP Bunnings Warehouse Property Trust
Slide 27: Appendix: Portfolio update
Appendix: Portfolio update 60 properties — good geographic spread 53 Bunnings Warehouses 1 Bunnings distribution centre 1 Bunnings Warehouse development site 4 Industrial properties 9 2 Bulky goods showrooms* 10 1 Dec 08 Value $m Cap rate 1 2 VIC *21 392.9 7.42% 1 1 NSW/ACT 14 213.1 7.61% 1 QLD 10 1
Slide 28: Appendix: Future market rent reviews and revaluations
Appendix: Future market rent reviews and revaluations Future Bunnings Warehouse market rent reviews and revaluations FY09 FY10 FY11 FY12 FY13 FY14 Rent reviews 9 10 4 7 7 22 Revaluations 23 19 19 23 19 19 9 market rent reviews remaining in FY09 Quarter 1 FY09 Quarter 2 FY09 Quarter 3 FY09 Quarter 4
Slide 29: Appendix: Portfolio lease expiry
Appendix: Portfolio lease expiry • 6.5 year weighted average lease expiry (by rental income) at May 2009 • Typical Bunnings Warehouse Property Trust lease features – 15 years (plus 2 x 5 year options) – 5 yearly market rent reviews (majority uncapped) – Annual CPI escalation – Wesfarmers covenant (B
Slide 30: Appendix: Bunnings Warehouse recent sales evidence
Appendix: Bunnings Warehouse recent sales evidence • Discussion with independent valuers and recent sales of Bunnings Warehouses supports BWP’s estimated cap rate expansion at May 2009 – Properties have been sold/contracted at a weighted average cap rate of 7.75% • Profile of properties sold are ref
Slide 31: Appendix: Bunnings Group Limited trading update
Appendix: Bunnings Group Limited trading update Bunnings Group Limited trading update for the period 1 January 2009 to 13* April 2009 (Source: Wesfarmers Limited Investor Presentation 21 April 2009) Bunnings Group Limited network Cash store-on-store sales growth of 11.1% (as at April 2009) • Good pe
Slide 32: Foreign jurisdictions
Foreign jurisdictions New Zealand The Information is not a New Zealand prospectus or an investment statement and have not been registered, filed with or approved by any New Zealand regulatory authority under or in accordance with the Securities Act 1978 (or any other relevant New Zealand law). The I
Slide 33: Foreign jurisdictions (cont’d)
Foreign jurisdictions (cont’d) European Economic Area (which includes Germany) (cont’d) (c) to fewer than 100 natural or legal persons (other than defined as qualified investors in the Prospective Directive) subject to obtaining the prior consent of BPML and the Underwriter for any such offer; or (d
Slide 34: Foreign jurisdictions (cont’d)
Foreign jurisdictions (cont’d) Singapore This Presentation and any accompanying documents has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the Presentation and any other document or material in connection with the offer or sale, or invitation for subscri
Slide 35: Foreign jurisdictions (cont’d)
Foreign jurisdictions (cont’d) Norway This Presentation has not been approved by, or registered with, any Norwegian securities regulators pursuant to the Norwegian Securities Trading Act of 29 June 2007. Accordingly, the Presentation does not constitute, or shall be deemed not to constitute, an offe